Association recommends hefty rate hike

TORONTO — Despite softening pricing in some sectors all over central and Atlantic Canada, the Freight Carriers Association (FCA) is advising fleets to raise their freight rates 4.9 percent effective April 2, 2007. Rates from or to the province of Alberta should be increased an additional 3 percent, FCA adds.

If the trucking industry is to be successful in attracting capital and maintaining capacity, rates need to be increased, recommends FCA’s Tariff Advisory Committee (TAC), which meets periodically to monitor economic conditions as well as the latest statistics on the profitability of general freight carriers.

The driver shortage, labor cost increases and regulatory changes are just a few of the factors currently increasing costs for the trucking industry.

Skyrocketing costs in Alberta inspire an extra
three percent rate boost says FCA

Using information developed by Statistics Canada, FCA estimates that labor costs for trucking companies have increased by 4.2 percent on an annual basis, while motor carrier non-labor index (excluding fuel), which reflect the price movement of goods and services motor carriers purchase, shows an annual increase of over 2 percent.

The impact of the new regulations effective January 1, 2007, are similar to that experienced within the U.S, where the impact is estimated at 1 to 5 percent, dependent upon a carrier’s operations.

Meanwhile, in Alberta costs have skyrocketed due to demand for labor in the oilsands and related sectors — making it near impossible for the industry to simply absorb them. Statistics Canada estimates hourly labor costs for general freight trucking within Alberta up over 19 percent in November 2006 compared to the same period the year before. An additional 3 percent rate increase is therefore recommended to offset those costs.

The costs associated with providing services such as appointment deliveries, waiting time, protective service, border crossing, return of pallets and handling of dangerous goods cannot be absorbed by the trucking industry, says FCA. The cost of these services are not included in the rates and must continue to be assessed separately.

Also excluded is the impact of the 2007 model engines as most of the industry has not yet purchased them. The engines are expected to add $10,000 to $15,000 to the price of a new truck.